henkel strategy/financial targets 2016 · pdf file2 november 16, 2012 henkel strategy...

1 Henkel StrategyNovember 16, 2012

Henkel

Strategy

London

Nov 16, 2012

Kasper Rorsted

Carsten Knobel


Disclaimer

This information contains forward-looking statements which are based on current estimates

and assumptions made by the corporate management of Henkel AG & Co. KGaA.

Statements with respect to the future are characterized by the use of words such as

“expect”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, and similar terms. Such

statements are not to be understood as in any way guaranteeing that those expectations will

turn out to be accurate. Future performance and results actually achieved by Henkel AG &

Co. KGaA and its affiliated companies depend on a number of risks and uncertainties and

may therefore differ materially from the forward-looking statements. Many of these factors

are outside Henkel's control and cannot be accurately estimated in advance, such as the

future economic environment and the actions of competitors and others involved in the

marketplace. Henkel neither plans nor undertakes to update any forward-looking statements.


Agenda

Henkel Strategy 2

3 Financial Targets 2016

Summary4

Achievements 2008 - 20121


We set a clear strategic direction with 3 priorities…


…and ambitious financial targets for 2012

3-5%

14%

> 10%

Org. Sales Growth (average)

EBIT Margin (2012)*

EPS-Growth (CAGR)*

* adjusted


All strategic priorities were pursued consistently

Strong financial performance

Efficiency gains

Strengthened global footprint

Focus on brands & innovations

Customer focus

Leadership in

sustainability

Performance culture

Improved diversity


Assumptions Reality

GDP Growth 3-4% CAGR 1.8% CAGR (-2.1% – +4.1%)

EUR/USD 1.40 – 1.55 1.19 – 1.51

Crude Oil 100 – 120 USD 37 – 127 USD

Volatility

We faced severe headwinds and volatility

Financial crisis

Political turmoils

Material price increases

Euro crisis

Headwinds


Despite all odds, we are underway to reach our targets

3-5%

14%

>10%

Org. Sales Growth ()

Adj. EBIT Margin

Adj. EPS-Growth (CAGR)*

* per preferred share

** Arithmetic mean 2009 through 2011

*** 2008 through 2011

Targets

2012

Actuals

1-9 2012

+3.1%**

13.0%

+12.8%***

Achievement

until 2011

+3.7%

14.3%

+19.4%

45%Sales Share EM 42% 43%


Our progress is built on various drivers…

2008

Shift to Emerging Markets / Strong Mature MarketsShift to Emerging Markets / Strong Mature Markets

2012

Shared ServicesShared Services

Optimization of Manufacturing FootprintOptimization of Manufacturing Footprint

Strengthening of Top Brands / Reduction of BrandsStrengthening of Top Brands / Reduction of Brands

New Vision & ValuesNew Vision & Values

New Sustainability StrategyNew Sustainability Strategy

Talent Management / Development Round TableTalent Management / Development Round Table

Targets beyond 2012Targets beyond 2012

…and will continue


Agenda

Henkel Strategy 2


Summary4



Core questions of our strategic review

Which megatrends will shape our

markets in the years to come?

How well is our portfolio positioned

against these trends?

What actions are necessary to capitalize

on these trends?

1

2

3


Consolidation of

suppliers, manufacturers and

buyers

Shift of market growth to

Emerging Markets

Rapidly changing markets &

faster transfer of information

Overview of megatrends and their implications

Trend Description Trend Implication

Increasing importance of

competitive size


Emerging Market presence


operational excellence in

processes and structures


Overview of megatrends and their implications


competitive size


Emerging Market presence


operational excellence in

processes and structures

EM sales

Total sales

EPS growth

Performance

Dimensions 2016Trend Implication


Long-term market assessment

Active in markets of significant size

Markets are attractive in terms of profitability and

offer long-term growth potential

Strong potential to expand our businesses

Strong ability to win in attractive markets


Leverage full potential in all businesses

Consumer Business

Laundry & Home Care Beauty Care Adhesive Technologies

Industrial Business


Our strategy is based on our vision & values

Customers People Financials

Sustainability Family

A global leader in brands and technologies


Leading position

Global footprint

Leading processes

Strong & diverse team

Leading financial performance

Key success factors to achieve our vision

#1 choice for customers & consumers

Innovation leader

Powerful brands

Balanced portfolio



outperform

globalized

simplified

inspired

We will

as a

with

and a highly

our competition

company

operations

team!

Henkel strategy


Henkel strategy

Outperform Globalize

Simplify Inspire

A global leader

in brands

and technologies


20 Sales [bn €]*

Henkel’s financial targets 2016

* incl. continuous portfolio optimization (without major acquisitions & divestments)

** based on consensus

~20

14.1

20~3.5 bn €

~2.5 bn €

20162012**2008

[bn €]


10 EM sales [bn €]*


~10

5.2

~3 bn €

~2 bn €10

20162012**2008


** based on consensus; sales share EM as of 1-9 2012

[bn €]


10 EPS CAGR [%]*

2.19

[€]

>10%

10%

20162012**2008

* incl. continuous portfolio optimization (without major acquisitions & divestments); adjusted per preferred share

** based on consensus



20Sales [bn €]*

10EM sales [bn €]*

10EPS CAGR [%]*

* incl. continuous portfolio optimization (without major acquisitions & divestments); EPS: adjusted per preferred share



Active portfolio mgmt

Leverage top brands

Powerful innovations

Focus on customers

Globalize

Simplify Inspire

OutperformOutperform

Henkel strategy

A global leader

in brands

and technologies


Outperform – Leverage potential in categories

Core Categories

Continuous investment in

top positions

Investments in category and

new segment expansion

Value Categories

Active Portfolio Management

Growth Categories

Leverage profit potential

with adequate investment

Divest/exit businesses

(~500 m€)


Outperform – Build on strong base

Consistent innovation

process

Trend-based innovations

Customer relationship

management

Consumer proximity

Focused & balanced brand

portfolio

Strong growth of top brands

Brand consolidation

Brands Customers Innovations


Accelerate sales growth with top brands

in % of sales

20162008

Strong growth driven by innovations & further roll-out of global brands

Further portfolio alignment towards umbrella brands

Top10

Other

38%

62%

46%

54%

~60%

~40%

* estimate

2012*

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Consistently drive trend-based innovations

Accessible

Luxury

Convenience &

Superior Quality

Performance &

Sustainability


New R&D sites fostering consumer proximity

Planned new site

Significant expansion of R&D centers in all emerging regions

Further leverage local competence

Johannesburg

Moscow*

DubaiToluca*

Sao Paulo

Pune

Seoul

* Significant

expansion


Actively deploy customer focus

Beauty Care

Meet-your-Consumer

Center

Laundry & Home Care

Shopper

Marketing

Adhesive Technologies

Technology &

Design Partnerships


Leverage strength in

Mature Markets

Expand footprint in

Emerging Markets

Globalize

Simplify Inspire

Outperform

A global leader

in brands

and technologies

Henkel strategy

Globalize


Globalize – Focus on regions with high potential

Continuation of profitable

growth with strong cost focus

Acceleration of growth in

existing Emerging Markets

Enter country white spots in

selective Emerging Markets

Mature Markets:

Leverage Strengths

Emerging Markets:

Go Deep

Emerging Markets:

Enter White Spots


Mature Markets – Further leverage strengths

Outperform our markets

Increase brand investments

Continue cost focus

2016

More top positions

Higher profit contribution


Emerging Markets – Accelerate growth

2016: Balanced EM footprint with 12 EM countries in Henkel Top 20

TurkeyRussia

EgyptChinaBrazilAlgeria

Ukraine

PolandMexicoKoreaIndia

UAE


Henkel strategy


Simplify Inspire

A global leader

in brands

and technologies


Acquisitions

In Line with Strategy Restrictive SelectionBoosting Growth

Active use of strong balance sheet


Cost efficiency

Best-in-class processes

Strong IT focus

Globalize

Simplify Inspire

Outperform

A global leader

in brands

and technologies

Henkel strategy

Simplify


Simplify – Drive operational excellence

IT as an enabler to drive

performance

Simplified & standardized

global IT structure

Foster leading sourcing

Continued expansion of

shared services

IT FocusCost Efficiency Best-in-Class Processes

Further improve admin costs

Location footprint optimization

Further reduce NWC


Further improve manufacturing footprint

From ~175 in 2012

To ~155 in 2016

Further consolidation both in Emerging & Mature Markets


Foster leading sourcing

Leverage global sourcing

Source via global hubs, focus on Emerging Markets

Integrated worldwide network of suppliers

Value creation

Strengthen strategic relationships

Focus on innovation leadership

Improve efficiency & effectiveness

Expand e-sourcing to >10% of spend

Reduce number of suppliers by ~40%


Expand shared services: >3,000 employees

Enhance and expand SSC capabilities

Multifunctional SSC to generate

competitive advantageBack Office

transactions-based

Middle Officerules-based

Front Officejudgement-based

September 30, 2012: 1,300 employees in SSCs

2006

2008

2012+


Shared services expansion

Newly established Business Process Outsourcing hub in Bangalore/India

Bratislava

Mexico City

Bangalore Manila

BPO: India

since 09/12

Captive SSCs

Hubs for Arabic speaking region & Greater China/N-E Asia


Invest ~140m€ in IT until 2016

# of processes

Horizon

~800

Today

~2,200

Past

>20,000

Reduce complexity & leverage one IT platform

Supply Chain Mgmt.

APO

SSC IT Solutions

Global integration

Promotion Spend

Planning & management

Global Henkel IT Platform: Horizon (SAP)


Strong leadership

Talent & performance focus

Diverse teams

Globalize

Simplify Inspire

Outperform

A global leader

in brands

and technologies

Henkel strategy

Inspire


Diversity

Leverage diversity as key

success factor

Inspire – Strengthen our global team

Talent & Performance

Attract the best talents

Reward performance

Set clear expectations

Develop strong leaders

Leadership


Executive Resource Program

Virtual pool of ~100 talents on top mgmt. level

Annual nomination by defined criteria

Personal development plan, high-level

training, selective initiatives, etc.

Successful record of promotions and job rotations


Diverse teams as key success factor

Nationality/Culture

Gender

Age/Seniority

Foster internationality in our teams

Increase female share by systematic

career development

Leverage experience of senior colleagues


Coherence of success & incentive

Target KPIs: OSG, Adj. EBIT %, NWC

Linked to individual performancePerformance

Po

ten

tia

l

Short-term incentive implemented as of 2011:

Linked to long-term financial targets

Target KPI: EPS

Ensures sustainable success & talent retention

20 bn € Sales

10 bn € EM Sales

10 % EPS CAGR

Aligned long-term incentive as of 2013:

Highly competitive reward system


Henkel strategy


Simplify Inspire

A global leader

in brands

and technologies


Agenda

Henkel Strategy 2


Summary4




20 Sales [bn €]*

10EM sales [bn €]*

10EPS CAGR [%]*

* incl. continuous portfolio optimization (without major acquisitions & divestments); EPS: adjusted per preferred share


Internal

Ongoing adaptation of our

structures to the market

Continuous portfolio management,

including small & mid-sized

acquisitions and divestments

(divestment/exit: ~500 m€)

External

Avg. GDP growth:

Global: 3.3% p.a.

Western Europe: 1.8% p.a.

USD at 1.30 USD/€

Material price development:

mid-single digit p.a.

Key assumptions for 2016 targets


Henkel’s financial targets 2016Step-change in scale

20 Sales [bn €]*


Mid-single digit CAGR until 2016

Outperform – Strong investments in categories

Globalize – Focus on regions with high potential


Henkel’s financial targets 2016Improved footprint

10 EM sales [bn €]*


High single-digit CAGR until 2016

Go deep in existing countries

Selectively enter country white spots


Henkel’s financial targets 2016Excellence in value creation

10 EPS CAGR [%]*

* incl. continuous portfolio optimization (without major acquisitions & divestments); adjusted per preferred share

Balanced value creation through top & bottom

line growth

Standardization & complexity reduction along

entire value chain to drive profitability

Continue strong cash orientation & financial

discipline to maintain “A flat/A2”-rating


Excellence in value creation

Cash-Return OptionsAcquisitionsOrganic Performance




Invest in our businesses

Enhance profitability

Further reduce NWC


Increase capex spend by >40%* to ~2 bn €

Strong focus on IT with investment of ~140 m€

Structural shift to Emerging Markets

Strengthen top brands & innovations via higher

marketing investments

Invest in our businesses

* total 2013-2016 vs. 2009-2012


Enhance profitability

Drive gross margin via innovation & pricing power

Further optimize production footprint by ~20 locations

Expand shared services to >3,000 employees

Continue focus on leaner structures

LeversFuture Levers


Further reduce NWC

Regional cross-divisional initiatives

in % of sales

-1,2pp

6.6

2008

11.7

5.1

2016

~5.0~1.6

1-9 2012


Organic performance resulting in higher cash flow

Holistic value creation focus

increases strategic options

NWC

% sales

Effective

tax rate Profitability

Invest

Free

cash flow




Accelerate growth potential


Acquisitions

In Line with Strategy

Adhesives: Technology

leadership

Laundry & Home Care/Beauty

Care: Regions & categories

Restrictive evaluation and

selection process

Centralized decision and

execution

Integrated part of our

overall strategy

Clear prioritization of

categories and regions

Restrictive SelectionBoosting Growth




Share buy-back

Dividend payout



Priority: Grow our business No change so far



Excellence in volatile environment

Henkel well prepared to achieve next level of targets

Euro crisis

EM growth slowdown

Market cyclicality

FX volatility

Competitive pressure

Excellence

in value

creation

Volatile Environment Performance Drivers

Organic focus

Operational excellence

Acquisitions/divestments


Agenda

Henkel Strategy 2


Summary4



outperform

globalized

simplified

inspired

We will

as a

with

and a highly

our competition

company

operations

team!

Henkel strategy


Strategy & financial targets 2016

20 bn € Sales

10 bn € EM Sales

10 % EPS CAGR


Excellence is the result of always striving to do better

We transform our plans into concrete actions

We are passionate about achieving our targets


Passionate to achieve our targets

Kasper Rorsted

CEOCarsten Knobel

CFO

Hans Van Bylen

Beauty Care

Kathrin Menges

Human Resources

Bruno Piacenza

Laundry &

Home Care

Jan-Dirk Auris

Adhesive

Technologies


Henkel – Strategic framework


Customers People Financials Sustainability FamilyValues

Vision

Targets 20 bn €

SALES

10 bn €

EM SALES

10 %

EPS CAGR

Strategy Outperform Simplify InspireGlobalize

Vision

Values

Strategy

Targets


Thank You!

henkel strategy/financial targets 2016 · pdf file2 november 16, 2012 henkel strategy...

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